RIYADH: Saudi Arabia’s non-oil private sector expanded at a stronger pace in August, buoyed by a revival in export orders and robust domestic demand, a key survey showed.
The Riyad Bank Saudi Arabia Purchasing Managers’ Index, compiled by S&P Global, rose to 56.4 from 56.3 in July, staying well above the 50-mark that separates growth from contraction.
The performance outpaced regional peers, with the UAE and Kuwait posting August PMIs of 53.3 and 53.0, respectively. The reading signals the Kingdom’s continued success in diversifying its economy away from hydrocarbons under its Vision 2030 blueprint.
Naif Al-Ghaith, chief economist at Riyad Bank, said: “The slight increase signaled another month of steady growth, driven by improving demand conditions, a modest rebound in output growth, and further gains in employment.”
He added: “Although activity growth has eased from the highs seen earlier this year, the underlying trend remains firmly positive.”
Survey participants cited improving economic conditions, rising sales, and proactive marketing efforts as crucial factors boosting activity in August.
The report noted an uptick in new order volumes, partly driven by a renewed rise in export sales. Companies attributed this growth to increased marketing in external markets and collaborations with clients across the Gulf Cooperation Council region.
“Firms reported stronger new business inflows, supported by an uptick in export orders and continued growth in domestic demand. Many attributed the improvement to more active marketing efforts and a healthier client pipeline, particularly across the service sector,” said Al-Ghaith.
S&P Global noted that employment in Saudi Arabia’s non-oil private sector continued to rise steeply in August, driven by new project initiations and greater skills requirements.
“Employment trends remained broadly supportive, with firms continuing to expand their headcounts to meet current and expected demand. Although the rate of hiring eased from recent peaks, it remained historically strong,” said Al-Ghaith.
According to the report, non-oil private firms in Saudi Arabia also ramped up purchasing activity in August at a faster pace than in the previous survey period.
S&P Global revealed that companies raised their selling prices for the third consecutive month in August. Survey respondents attributed this trend to higher costs and rising customer demand.
“On the cost front, input prices remained elevated due to persistent pressures on material, transport, and technology-related expenses. Wage pressures eased slightly, but firms still faced broad cost challenges. With an increase in demand and the above factors, output prices continue to grow, though increases were generally modest,” said Al-Ghaith.
After hitting a 12-month low in July, business optimism improved in August. Non-oil firms expect positive outcomes in the coming months, citing rising demand, ongoing projects, and supportive government policies.
